The coming battle over Medicaid

Chief Justice John Roberts handed backers of Obamacare a time bomb in the part of the court decision affecting Medicaid. The whole point of the Affordable Care Act is to provide health insurance to people who can’t afford to pay for it. Expansion of Medicaid coverage of people above the poverty line is an important part of expanding health insurance coverage, and one of the things that made Obamacare palatable to liberals. But Chief Justice Roberts rules that state governments can refuse to expand Medicaid coverage if they wish, and still keep existing Medicaid subsidies.

A number of state governors—all Republicans—have said they’ll exercise their right to refuse to expand Medicaid. I’m in favor of expanding Medicaid, and I wish I could say that this is nothing more than blind partisanship or contempt for the poor. Unfortunately, there are objective reasons why a state governor might be dubious about expanding Medicaid.

The good folks at Think Progress point out that, under the Affordable Care Act, the federal government will pay 100 percent of the cost of Medicaid expansion for the first two years, and 90 percent for the next five years. But what happens after seven years? This is how the federal government has always induced state and local governments to adopt federal programs—offer subsidies that are too enticing to refuse, then gradually pull back after the program has created a local constituency to advocate for it.

Unfunded federal mandates are a big program for state and local governments, and unfunded state mandates are a big problem—I don’t think New York state is alone in this—for state governments. The growing cost of Medicaid, unlike Social Security and Medicare, is a big problem. Part of the practice of my lawyer friend DH is to help middle class retirees gradually give away their wealth to their loved ones so that they can qualify for Medicaid in their declining years. I don’t blame people who want to leave an inheritance rather than have it all eaten up by medical bills, but this isn’t the purpose of Medicaid.

The Obama administration claims there are cost-saving measures that will limit the increase in Medicaid. Fewer people will go to hospital emergency rooms for routine medical care, for example. Maybe so and maybe not—the answer is not obvious. What was obvious from the start was that the complexity of the Affordable Care Act, and the slow timetable for putting it into effect, was sure to guarantee an ongoing struggle.

Click on The Obamacare Tax on the Middle Classfor an argument by James Kwak on Baseline Scenario that most Americans will not be affected by the Affordable Care Act and that most of those who are affected will pay less for health coverage.

Chief Justice Roberts’ reasoning is hard for a layman like me to understand. Since 1937 the Supreme Court has held that the Constitutional authority to regular interstate commerce is the authority to regulate national industries, of which health insurance is surely one. He rejects that, but then he appears to say that any law which contains financial penalties for noncompliance is constitutional under the taxing authority of Congress.

Then he says there is a constitutional right to receive federal subsidies under a law while refusing to comply with amendments to that law. I suppose this means the Obamacare Medicaid expansion would have been constitutional if Congress had repealed the existing Medicaid law and then enacted a brand new law. But why isn’t the Medicaid expansion constitutional under the taxing authority of Congress?